Scotia expects higher loan growth despite coronavirus
Banking conglomerate Scotia Group Jamaica Limited, SGJ, thinks that the spread of the coronavirus, COVID-19, could lead to a fallout in key sectors, but that the banking sector would see a growth in loans, regardless.
The company expects that it will improve its own loan portfolio, which was valued at $205 billion at year ending October 2019.
One of its initiatives is a $500-million Women Entrepreneurship Fund that is soon to be launched. It would provide female business owners with loans at 9.99 per cent to support business growth, without commitment fees.
“Despite the challenges of COVID-19, we expect those numbers to grow,” said SGJ President & CEO David Noel regarding loans, while addressing shareholders at the company’s annual general meeting on Thursday.
That same morning, the bank announced a two-week closure of its New Kingston branch after learning that one of the two known coronavirus cases visited there and interacted with staff.
Noel said other branches will remain open but undergo increased sanitisation.
“We do not think there are any causes for concern at this time. We continue to clean the branches, but at a deeper level every night, and we are adding hand sanitisers in every branch,” added Noel.
Still, SGJ is now encouraging Scotiabank customers to utilise online banking channels as much as possible.
Scotia Group also live-streamed its annual general meeting for the first time this year, as an option for persons who wanted to attend but not mingle publicly with others.
SGJ made $1.78 billion in net profit on revenue of $10.18 billion for its January 2020 first quarter. Profit was 23 per cent less than a year earlier. Additionally, revenue dipped from $10.65 billion a year earlier.
Noel said the results were affected by accounting-rule changes, and that absent the effects a one-off gain, the results would have been on par with last year.
“We know there are potential headwinds, particularly for the cruise ships, airlines and from a supply chain perspective,” said Noel. “But, we believe that the Jamaican economy is more resilient and we will get through COVID-19. There could be headwinds, but we will get through it,”
The bank’s stock has been falling, but the market has been falling even faster. Despite the seven per cent dip since March for the banking stock, it would still have represented a safe haven for investors within the context of a 14 per cent decline across the market.